WEEKLY MARKET DIGEST: FED SPLIT, SILVER FLASH CRASH, LIBYA HURTS OIL, N. KOREA NUCLEAR THREAT $DIA $GLD $QQQ $SLV $SPY $TBF $TBT $USO

WEEKLY MARKET DIGEST: FED SPLIT, SILVER FLASH CRASH, LIBYA HURTS OIL, N. KOREA NUCLEAR THREAT $DIA $GLD $QQQ $SLV $SPY $TBF $TBT $USO

Weekly Digest from The Arora Report is popular among serious investors and money managers because they have found studying insights from the prior week gives them an edge over the coming weeks. Here is the day by day rundown from the morning capsules made available every morning before the market open in the Real Time Feeds to the paying subscribers of The Arora Report

Please scroll down for the section What To Do Now.

BLOWOUT JOBS NUMBER MOVES MARKETS, SILVER FLASH CRASH, LIBYA HURTS OIL

This is what you need to know today.

Lower Jobs Number Moves Markets

Jobs number just reported is a blowout.  Non-Farm Payrolls came a 222K vs. 174K consensus.  Markets are moving on the headline.

As our long-time readers know, The Arora Report focuses on Non-Farm Private Payrolls.  This number was not as robust as the headline number.  Non-Farm Private Payrolls came at 187K vs. 175K consensus.  Our expectation is that as prudent money managers look below the surface, some of the current moves in various markets may reverse.

Silver Flash Crash

Over night there was a flash crash in silver that caused futures in Asia to tumble about 10%.  This was likely caused by a mistake as is evident by immediate recovery after the drop.

Those with stop loss market orders were burned.  This is why our Trade Management Guidelines dictate to use stop loss orders only as a second line of defense.  Please see Trade Management Guidelines — these are the techniques that billionaires and hedge funds use to grow richer.  (When you take a free 30 day trail, you get access to powerful techniques used by billionaires’ and hedge funds to grow richer.  You can continue to use these powerful techniques to grow richer even if you cancel your subscription.  You come out ahead by subscribing no matter how you look at it.) 

Gold

Pattern of the momo crowd is to buy gold on a strong jobs report. This defies logic but the momo crowd is repeating the pattern.

The pattern of the ‘smart money’ is to sell into the strength after a strong jobs report.  It has only been a few minutes since the report has been released.  We will be carefully watching to see if the smart money steps in to sell.

Libya And Nigeria Weigh On Oil

EIA data released yesterday was bullish for oil when taking into account the totality of the data and not just crude oil inventories.

However, a survey shows that Libya and Nigeria could be increasing production.  These two African countries are exempt from OPEC production limits.

This is putting significant pressure on oil prices.

Bonds Get Hurt

The data is hurting bonds.  Bonds are falling and interest rates are going higher.

Technical Patterns

Korean stocks are showing a Triple Top.  This is bearish. ETF of interest is .

This is powerful information and many investors use this to enter trades in addition to our official signals.  Here are the three most common uses: 1) Short-term trades in ETFs  2) Decisions to trim or add to long-term positions, and 3) New option trades. These should be used judiciously only in conjunction with macro, fundamental and quantitative indicators.  To learn more please click here.

Markets

Our very, very short-term early stock market indicator is neutral.

Yen is weaker but euro is staying strong.  Overall dollar is range bound.

Gold futures are at $1221, silver futures are at $15.89, and oil futures are $44.63.

S&P 500 resistance levels are 2425, 2450 and 2500; support levels are 2400, 2363, and 2334.

DJIA futures are up 39 points.

FRENCH BOND WEAKNESS SPILLS INTO STOCKS, WEAK ADP, FED SPLIT, MOTHER OF ALL NUMBERS AHEAD

This is what you need to know today.

French Bond Weakness Spills Into Stocks

The latest auction of French bonds was disappointing.  This is due to central banks turning hawkish as we have been sharing with you recently.   Especially important in this case is European Central Bank, please see prior Morning Capsules for more details.

The weakness in French bonds first spilled into German bunds where yield hit the highest in 17 months.  Then the weakness got carried to European stocks and from there to early trading in U. S. stocks.

Weak ADP Data Helping Stock Recovery

ADP is the largest private payroll processor in the United States.  It uses its data to provide a glimpse of the employment picture in the United States ahead of the official numbers that will be released tomorrow morning.

ADP came at 150K vs. 180K consensus.

For the moment, the stock market likes this and is recovering from French bond weakness.  The reason the stock market is liking this today is because if employment picture weakens, the Fed is less likely to raise interest rates.

Fed Split

Fed minutes show that the Fed is split on reducing its massive $4 trillion balance sheet.

Right now stock market investors are not focused on this, but this is one of the most important items to keep an eye on. 

The reason is that the present stock market rally, in large part, has been driven by the excessive liquidity provided by the Fed.

Mother Of All Numbers Ahead

Tomorrow morning at 8:30 am ET the Department of Labor will release its June employment report.  This is the mother of all numbers because it typically affects the stock market more than any other economic number.

This is a lagging indicator but still deserves lots of attention because major institutions pay a lot of attention to it.

Gold

Gold is gaining support from North Korean missile test.

Oil

EIA data was not released yesterday like normal due to the holiday on Tuesday.  The data will be released today at 11:00 am ET.

The natural gas data will be released at 10:30 am ET.

Both of these events have potential to provide opportunities for trading.

Technical Patterns

None of note.

This is powerful information and many investors use this to enter trades in addition to our official signals.  Here are the three most common uses: 1) Short-term trades in ETFs  2) Decisions to trim or add to long-term positions, and 3) New option trades. These should be used judiciously only in conjunction with macro, fundamental and quantitative indicators.  To learn more please click here.

Markets

Our very, very short-term early stock market indicator is negative.

Bonds are ticking down and interest rates are ticking up.

Currencies are range bound.

Gold futures are at $1224, silver futures are at $15.97, and oil futures are $45.82.

S&P 500 resistance levels are 2425, 2450 and 2500; support levels are 2400, 2363 and 2334.

DJIA futures are down 68 points.

GLOBAL JITTERS ON POTENTIAL OF NUCLEAR ATTACK ON THE U. S. BUT GOLD RALLY FAILS, FED MINUTES, OIL MOVE

This is what you need to know today.

Global Jitters On Potential Of Nuclear Attack On The U. S.

It has been confirmed that the latest test by North Korea was an Inter Continental Ballistic Missile.  It is alleged that the missile is capable of carrying a nuclear war head and North Korea is close to having the capability to launch a direct nuclear attack on the U. S. mainland.

There are global jitters in the financial markets over this new development.

Money Rushes To Safe Havens Like Gold

On the news money rushed into the safe haven of gold, bonds, and yen.

Gold Rally Meets Aggressive Selling And Fails

Gold rally was driven by the momo crowd.  As the rally gained steam, it meet aggressive selling by the ‘smart money.’

As of this writing, not only the rally has failed, gold is making new lower lows in this cycle.

The Reason Behind Smart Money Selling Gold

The reason behind the smart money selling gold is the anticipation of the Fed minutes being more hawkish than the consensus.

The Fed Minutes

The Fed minutes will be released at 2:00 pm ET.  We will carefully analyze them and let you know if an action is required.

Oil

Oil rally is coming to a halt on Russia saying that it is opposed to deeper production cuts.

Technical Patterns

Several junior gold miner stocks are tracing a Symmetrical Continuation Triangle.  This is bearish.  ETF of interest are , and .

This is powerful information and many investors use this to enter trades in addition to our official signals.  Here are the three most common uses: 1) Short-term trades in ETFs  2) Decisions to trim or add to long-term positions, and 3) New option trades. These should be used judiciously only in conjunction with macro, fundamental and quantitative indicators.  To learn more please click here.

Markets

Our very, very short-term early stock market indicator is neutral.

Gold futures are at $1218, silver futures are at $15.91, and oil futures are $46.55.

S&P 500 resistance levels are 2450 and 2500; support levels are 2425, 2400, and 2363.

DJIA futures are up 16  points.

WHAT TO DO NOW

Looking ahead and not only in the rear view mirror, consider continuing to hold existing core portfolio positions. Based on individual risk preference, consider 27 – 38% of assets in cash or treasury bills, and short to medium-term hedges of  25% and very short term hedges of 5%.

 

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